Thats why I say we should have bots that speculate on the price. Ultimately it stops these booms and busts from happening. Depending on how the bot is programmed it will buy xyz bitcoins for xyz price, then instantly put in a sell order for 1$ more than it bought them. If the order executes then the bot places an order for the sell price -1$.

It depends on the bots' strategy. You're thinking of strategies that provide negative feedback and help stabilize the market. However, if the bots chase momentum, you get positive feedback and booms and busts are more likely. No doubt strategies of both kinds will be implemented, so the net effect of bots is not clear.

True. It depends on the style of the bot. My bot is more passive, sit and hold. When the right price its, then sell. The bot you are talking about is more aggressive. When it sees strong upward price movement, then it buys and sells further up.